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The Vaccine Research Limited Partnership and Mr Vaughan v HMRC

In The Vaccine Research Limited Partnership and Mr Vaughan v HMRC [2014] UKUT 0389 (2 September 2014) the UT found that an avoidance scheme using capital allowances did not work.

The issue was whether the partnership had incurred ‘qualifying expenditure’ within the meaning of CAA 2001 s 437 (expenditure on research and development relating to the partnership’s trade). This raised two further questions: whether the partnership was trading; and if so what was the quantum of the expenditure.

Under a research agreement the partnership had paid £193m to a company Numology in contemplation of a research sub-contract entered into between Numology and another company PepTcell which carried out the research for a payment of £14m. The UT accepted the FTT’s finding that although the evidence was not conclusive ‘beyond all doubt’ on the balance of probabilities the partnership’s activities of...

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